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Lodging Econometrics Reports Asia Pacific Continues to Drive Global Pipeline Growth

33% of World’s Total Pipeline Rooms are in China & India

March 9, 2011 - Powered by some of the world’s fastest growing economies, chiefly China, India, Vietnam, and Indonesia, the Asia Pacific region continues to demonstrate a quick bounce-back from the global economic crisis. Sweeping fiscal and monetary stim­ulus programs mitigated the impact of the recession. As a result, strong economic growth of 5% or more is expected in many Asian countries through 2013.

Recently overtaking Japan, China is now the world’s second largest economy and the primary force in driving current global lodging development growth. At the end of Q4, China had the second largest Total Pipeline of any country at 1,182 projects/323,194 rooms. For the second consecutive quarter, China led the world in Construction Starts, with 139 projects/25,498 rooms in Q4. Also, for the first time ever, the country exceeded the United States in New Project Announcements (NPAs) into the Pipeline, with 155 projects/30,191 rooms.

India’s Total Pipeline, the third largest in the world, grew for a fourth consecutive quarter to 456 projects/80,738 rooms in Q4. Like China, India’s economy is one of the fastest growing in the world, but its Pipeline totals were just 39% of China’s total projects and a distant 25% of its rooms. Most global hotel companies have a high interest in India and continue to announce growth strategies for the country, which should boost development metrics and feed Pipeline growth through mid-decade.

Lodging operations have recovered substantially, with some of strongest increases off the recessionary bottom for any region worldwide. Average Rate and RevPAR in Asia Pacific recorded double-digit increases from 2009 to 2010. Occupancy was also up significantly. All three metrics will likely be fully recovered in 2011, and could potentially exceed pre-recession highs, further energizing already high development activity in the region, particularly in China and India.

With 1,182 projects/323,194 rooms, China had the second largest Total Pipeline of any country in Q4. 77% of all projects and rooms were Under Construction, one of the highest percentages in the world. China will have the highest amount of new rooms coming online as new supply over the next two years. LE’s Forecast for New Hotel Openings expects 479 new hotels/89,928 rooms to open in 2011, with an additional 292 hotels/91,924 rooms in 2012. China’s Total New Projects Announcements (NPAs) into the Pipeline continued to rise annually, growing 25% by projects and 17% by rooms from 2009 to 2010. Con­struction Starts for projects already in the Pipeline also rose, up 31% for both projects and rooms.

India’s Total Pipeline increased slightly from Q3 2010 to 456 projects/80,738 rooms. With 50% of all projects and 53% of rooms Under Construction, LE anticipates New Hotel Openings to rise, with 95 new hotels/14,377 rooms forecasted to open in 2011, and then increase again in 2012 to a new cyclical high of 91 hotels/17,924 rooms. Developer activity in India has grown over the last three years, but at a lesser pace than seen in China. New Project Announcements into the Pipeline were up 19% year-over-year by projects, while Construction Starts were up 10%. Increasing expansion plans by global hotel companies will likely keep development metrics on a modest upward trajectory for the next few years.

Other Asia Pacific countries, especially countries in the Southeast like Vietnam, Indonesia, Thailand, and Malaysia, saw an uptick in development activity in 2010. The Total Pipeline rose for the first time in seven quarters to 345 projects/74,827 rooms, up 12% by projects and 10% by rooms over Q3 2010. Annual totals for underlying development metrics also rebounded. In 2010, total NPAs were up 34% over 2009, with 147 projects/29,142 rooms. Construc­tion Starts, at a total of 130 proj­ects/27,945 rooms in 2010, were up 43% by projects and 55% by rooms, surpassing the 2008 pre-recession high in 2008.

As regional governments enact stronger measures to control escalat­ing inflation, the pace of development activity may moderate a bit, but is ex­pected to keep trending higher through the middle of the decade.

Lodging Econometrics
500 Market Street, Suite 13,
Portsmouth, NH 03801 USA
p: +1 603-431-8740

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Also See: Lodging Econometrics Reports 2012 Forecast for New Openings for EMEA; Pipeline Totals Continue to Fall, with Further Declines Expected as European Economies Soften and Political Turmoil Intensifies in the Middle East / March 2011

Lodging Econometrics Reports U.S. Q4 2010 Transaction Volume: 2010 Average Selling Price Up 86% From 2009; Indicates Future Transactions to Escalate Through 2014 / February 2011

Lodging Econometrics Reports U.S. Hotel Openings to Remain at Cyclical Low in 2011 and 2012 / February 2011

Lodging Econometrics Q3 2010 Americas Real Estate Trends Report; Brazil's Pipeline Up 87% Year-Over-Year / December 2010

Lodging Econometrics Revises its 3rd Quarter Forecast for New Hotel Openings Downward to 562 Hotels for 2011 & 515 Hotels for 2012 / November 2010

Construction Starts for U.S. Hotels Reach a Record Low of 80 Projects with 8,566 Rooms in the 2nd Qtr 2010 / LE Forecast / July 2010

U.S. Hotel Construction Pipeline Decelerating Rapidly; LE First Quarter 2009 Results / April 2009

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